Martin Currie Reports First Loss in 132 Years on ChinaTim Farrand
Martin Currie Investment Management Ltd., an Edinburgh-based fund manager, posted a loss last year for the first time since it was founded in 1881 after clients withdrew money amid misconduct at a China fund.
The fund manager had a loss of 9.3 million pounds ($14 million) before tax, interest and other items compared with a profit of 7.7 million pounds in 2011, Martin Currie said in an e-mailed response to questions today. Revenue fell to 33.8 million pounds from 65.5 million pounds in 2011.
Martin Currie was fined about $14 million in 2011 by finance regulators in the U.S. and the U.K. for manipulating a client to aid a hedge fund it managed. The firm advised The China Fund Inc. to invest in its struggling hedge fund with a “largely illiquid exposure” to a Chinese company, according to the Securities and Exchange Commission.
The scandal resulted in the departure of Chris Ruffle, a fund manager that U.K. regulators said invested about 15 million pounds on behalf of one client in an unlisted convertible bond.
The firm’s assets under management have dropped to 5.5 billion pounds at the end of July from 10.1 billion pounds in mid-2011. The company suffered “shrinkage” in its Chinese business as a result, which added to “legacy issues of investment performance” in 2008 and 2009, Chief Executive Officer Willie Watt said in the e-mail, without elaborating.
“While we continued to manage costs carefully in 2012, it would have been possible to reduce the loss -- and indeed be profitable -- had we taken more aggressive action to control costs,” Watt said. “However, this would have compromised both our ability to deliver for our clients and our long-term strategy.”
Martin Currie has returned to profitability in the first half of this year, and sales are up 50 percent from a year earlier, according to the CEO.